The Importance of Fiscal Solvency
In 2012, the City of San Bernardino, California declared bankruptcy. The housing crash of 2008 had taken its toll on San Bernardino, the city’s growth stalled, which allowed its past of unsustainable practices to catch up with it. This had disastrous consequences for San Bernardino’s residents.
Prior to bankruptcy, San Bernardino had a $50 million budget shortfall on a $250 million budget. The city was living far outside its means. To exit bankruptcy protection, San Bernardino needed to show it could reign in its speeding and produce a balanced budget. To do so, many city services were cut, including police and fire services, road repair, park maintenance, social programs, and services for the needy. These cuts are evident in the city still today, and will remain an impediment to creating a healthy community for years to come.
When visiting downtown San Bernardino, you’d be forgiving if you thought you’d stumbled upon a post-apocalyptic dystopia. For the most part, the downtown is devoid of life (except in front of the IRS building), and it feels like tumbleweeds could make an appearance at any time. The streets and sidewalk are quickly falling into disrepair, the city unable to afford basic maintenance even before bankruptcy.
From the statistics of the city, the most noticeable result of the cut in City services has been a growing crime wave throughout San Bernardino. While there has been a rise in violent crime in large cities across the United States in 2015 and 2016, San Bernardino has had it worse. In 2016, San Bernardino was ranked as the most dangerous city in California.This spike in crime was due largely to a cutback in police protection resulting from a 10% budget cut to the police force between 2007 and 2015 at a time when the City’s population increased by 10%.
Other city services have been cut as well. Of the four libraries in the city, only two are open on the weekend, for four hours each on Saturday afternoon. During the week, the libraries are only open four days a week, from 10AM to 6PM, hour which make it hard for any working adult to use the library. The services offered by the Parks, Recreation, & Community Services Department were slashed, offering fewer outlets for kids and opportunities for adults to participate in their community. Worst of all, the City has been unable to focus on future planning for the city, their General Plan is more than a decade old. San Bernardino has been in triage mode since declaring bankruptcy, and is only now starting to be able to focus on a long-term plan for creating a sustainable future.
San Bernardino is not the only city in the United States that has faced bankruptcy in recent years, and others will likely do the same during the next economic downturn. However, San Bernardino is an excellent example of the risks of insolvency for other cities. It is possible for cities to continue on as they have been, funding services through borrowing and making use of one-time payments. But that debt will one day come due. When it does, every city will be forced to follow the same path that San Bernardino has gone down over the past decade and slash services while making the lives of its residents demonstrably worse.
As the late great author, Robert Heinlein said, TANSNAAFL: There Ain’t No Such Thing As A Free Lunch. Judging by the budgets of most cities, it appears that they believe they’ll be able to continue borrowing indefinitely to pay for city services above and beyond what they can afford. Maybe the powers that be simply think that they can borrow long enough to fund these services through their lifetime, and damn the generations that follow who will be stuck with the bill. Whatever the reason, some day those bills will come due. Either cities can face that reality now while they have the opportunity to adjust their spending is a controlled way, or wait for the inevitable failure and slash their services completely.
[Note: This is one article in a longer series on fiscal solvency of cities, part of a larger look at how local communities can address global issues related to climate change, housing affordability, the local economy, the fiscal solvency of cities, and public health.]
